Fri, May 22, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

A. Ineichen: the real value of hedge funds is in active risk management, not alpha

Thursday, December 02, 2010

Benedicte Gravrand, Opalesque Europe:

"Is alpha quantifiable in the absolute return space?" asked Alexander Ineichen his audience during Terrapinn's Hedge 2010 conference in London last month. The short answer was "not really."

Alpha is not really more than just a marketing term, he said. The value that hedge funds really add, according to the Zug, Switzerland-based founder of Ineichen Research and Management, is active risk management.

Hedge funds indeed seek an asymmetric return profile through active risk management rather than try and beat an arbitrary benchmark. It is risk management experience and skill that help survive accidents and avoid negative compounding. And accidents do happen; financial crises have occurred every 10 to 15 years since the Middle-Ages. Risk management is the discipline that deals with these "known unknowns".

The twenty-year period from 1980 to 1999, according to Ineichen, as far as financial cycles go, was an outlier, as indeed the equity market compounding rate was unusually high then; UK equities, for example, returned an average of 12 to 14%.

"This was essentially an accident," he explained, "as much lower returns are the norm. During this investor-friendly period, it was not necessarily obvious that risk management was required for the long-term investor; long-only and buy-and-hold strategies......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Comment - Top hedge fund managers talk about how easy their jobs have gotten, BlackRock to Schroders warn of Argentina’s $20bn bond glut, The 35-year “investment supercycle” is drawing to a close, says Bill Gross, Gundlach: When the Fed starts hiking rates, 'GET OUT' of this asset class[more]

    Top hedge fund managers talk about how easy their jobs have gotten From Businessinsider.com.au: Time was, before the financial crisis hit, corporate boards treated multi-billion dollar hedge fund managers like Jehovah’s Witnesses pounding on their doors and flashing bibles. But no more.

  2. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  3. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  4. Opalesque Exclusive: Ovation Partners targets opportunities where few "natural lenders" participate[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Changes in financial regulations post-2008 (Dodd-Frank and Basel III) are forcing banks to significantly alter their core lending businesses. And as mid-sized

  5. Opalesque Exclusive: A lot of hedge fund investors are beginning to recognise the need for ongoing cyber threats monitoring[more]

    Benedicte Gravrand, Opalesque Geneva: Corporate Resolutions Inc. recently formed a strategic partnership with iThreat Cyber Group. The two companies have worked together for years, assisting clients when challenging

 

banner